The Millennium Ecosystem
Assessment defines “ecosystem services” as those benefits that people obtain
from ecosystems. These benefits can be direct, as in the production of
provisions, such as food and water (“provisioning services”), or the regulation
of features such as floods, land degradation, desiccation, soil salinization,
pests and disease (“regulating services”), or indirect, through the functioning
of ecosystem processes that produce the direct services (“supporting services”).
Examples of supporting services would be the processes of photosynthesis and the
formation and storage of organic material; nutrient cycling; soil creation; and
the assimilation, neutralisation and detoxification of wastes. Ecosystems also
provide people with non-material benefits such as aesthetic pleasure,
recreational opportunities, and spiritual and cultural sustenance (“cultural
services”). There are thus a range of ecosystem services, some of which benefit
people directly, others which do so indirectly.

Obviously, changing land uses also make a different for what type of service
an ecosystem will produce. Some services have the characteristics of “public
goods” in that people usually cannot be excluded from benefiting from them, and
the use of the service by one person does not significantly diminish the
availability of that service to other users. Nevertheless, people can degrade
the capacity of ecosystems to continue supplying these services, either through
changing the composition and structure of a system and how it works, or through
extracting material from the ecosystem at a rate that is above the replenishment
capacity of the ecosystem. Paying for ecosystem services is aimed at providing
land users with incentives not to degrade ecosystems and their services, but
rather to protect them.

Whereas the different elements of an ecosystem, and therefore the various
services that an ecosystem provides, are functionally linked, in any one
instance a buyer of “ecosystem services” (more usually referred to as
environmental services) is likely to be interested in the measurable, or at
least verifiable benefits of a particular service, rather than the whole suite
of them. The management required to provide these services will also vary,
depending on the service concerned. Environmental services are therefore usually
bundled into four main classes: watershed services, concerned primarily
with the provision of adequate amounts of good quality water, and secondarily
with hydrological control of such phenomena as flooding, erosion and soil
salinization; carbon sequestration, involving the long-term storage of
carbon in woody biomass and soil organic matter; biodiversity conservation,
related to those processes that determine and maintain biodiversity at all
levels (landscapes, species and genes); and aesthetic features or
landscape beauty, the maintenance of which serve as sources of inspiration,
culture and spirituality, as well as commerce in the form of eco-tourism. Those
are the four service areas where actual payments have so far been made.